Minimize your Bitcoin transaction fee with Electrum wallet

[tranthidung]

SUMMARY

• Mempool is the best option. It's much better than ETA and Static but always double check mempool to compare it with given estimation from Electrum wallet.
• If you know what you are doing, are aware of mempool (volatile memory), you can use any option because with any option, you are free to customize your fee. After your initial broadcast, you can bump your transaction fee later if you want to have faster confirmation.
• Reminder: Electrum uses sat/vbyte for fee rate but its label is in sat/byte and has yet been corrected by Electrum developers. That issue
• Many screenshots are from months ago, I don't have access to my wallet at the moment to make new screenshots, but if you are curious about information, you can quickly check it with your Electrum wallet.

Your transaction fee will be decided by transaction size, fee rate. You can save transaction fee by using either lower fee rate or reducing your transaction size.

• Transaction fee = Transaction size * Fee rate

Let's discover it, step by step!

TRANSACTION SIZE
You can reduce your transaction fee by reduce its size that requires you to know how to use your inputs and outputs effectively.
For inputs, you can reduce the input number by consolidate your small inputs when network is not at high demand from users. Then you can make consolidation with very cheap fee rate.
For outputs, it depends on how many senders you will send your coins too with your sending transaction, including your own change address as part of outputs.
Generally, you can reduce transaction size by using Segwit address (Bech32) that starts with bc1q. Since its deployment in 2017, many wallets and later centralized exchanges support that wallet type.
Please use some Bitcoin Transaction Size Calculators at Reference (bottom) to understand it better.

A strong reminder, you can use centralized exchanges that support Segwit but you should not rely on them. Storing your coins on centralized exchanges, with custodial wallets, is extremely risky.

• Reminder: do not keep your money in online accounts

Let’s control your coins by non-custodial wallets like Electrum, Bitcoin Core wallets. In this guide, I present only Electrum wallet as it fits with newbies and their limited resources for wallet storage.

FEE RATE
Now, let’s move on to fee rate. What is best fee rate for you to use?
It depends on your need.
If you want to move your coins within a short time like 10 or 20 minutes (~ 1 or 2 next blocks), you will have to pay expensive fee at that moment.
If you are not hurry and can wait longer, you can use lower fee rate and wait for like 1 hour (next 6 bocks) or even longer like 12 hours or 24 hours. Remember that if you use too low fee rate, your transaction will be at bottom of mempools and waiting time will be up to 14 days (2 weeks or 2016 blocks). After that, if your transaction is still not confirmed, there is possibility that it will be dropped from mempools.
Note that not all mempools will drop your transaction but some will. That leads to a need that you might see your transaction is Failed, then you will have to re-broadcast it.
Be aware of this risk and avoid to choose extremely low fee rate. If you only need to consolidate your inputs, don’t do this when network is in high demand. Just observe mempools and choose good times to broadcast your transactions.

WHERE TO CHECK FEE RATES?
Check it in mempools. There are some websites to do that but I’d like to recommend two sites:

• https://mempool.space/
• https://jochen-hoenicke.de/queue/#BTC%20(default%20mempool),24h,weight
• https://mempool.jhoenicke.de/#BTC,24h,weigh

With mempool.space, you can choose chart option to have better overview. If you are new with this experience, use their main page and get default given information.

The second site, Joe-hoe, is more advanced but it is more helpful.

Now, how to use it?
Block time is about 10 minutes in average. When you broadcast your transaction, it will appear in mempools. Then miners will pick transactions that can give them most beneficial transaction fees (with highest fee rates and biggest sizes). They will prioritize such transactions, and 1 block equals to 1 vMB from tip of mempool.
Hovering the mouse on the mempool chart, you will see different fee bands (in different colors) and corresponding size of waiting transactions within that fee band. Let’s consider and choose a fee band that matches you.

HOW TO CHOOSE FEE RATE WITH ELECTRUM WALLET?
In Electrum wallet, you will have three options when broadcasting your transactions: ETA, Mempool, and Static. Let’s dig into each of them.

Turn on Edit fee manually.

ETA
What does ETA means? It is Estimate Time of Arrival. It means something. It is only estimation of arrival time or first confirmation time for your transaction.

Mempool is lively up and down, so an estimation at the time you broadcast your transaction can be not correct. The actual confirmation time can be longer or shorter than ETA if mempool is up or down, respectively. ETA gives you estimations in time like 30 minutes, 1 hour, etc.
This is disadvantage of ETA option. It usually will cost you more than Mempool and Static options.

Mempool
Mempool is an option which gives you information in how many waiting blocks for your first confirmation, such as within next 1-2 blocks, next 10 blocks, 25 blocks, etc.
It is a better option than ETA. You will have less likely overpay fee for your transaction.

Static
This option is useful when you comprehensively know what you are doing. It is helpful when you only make your transactions when mempool drops to your favorite fee rate.
When you use this option, with your experience and mempool observation, you won’t overpay fee for sure.

Comparison
Compare three options and see difference, ETA and Static options provide overpaid fee than Mempool option. All of them are estimations because we don't know how mempools will become in next 100 minutes.

Within 10 blocks

• ETA: 106.3 sat/vbyte
• Static: 100 sat/vbyte
• Mempool: 14.5 sat/vbyte

Double check with https://jochen-hoenicke.de/queue/#BTC%20(default%20mempool),8h,weight

ELECTRUM ON ANDROID
Use Electrum wallet on mobile (Android) like your hot wallet and store small fraction of bitcoin there, security-wise.

On mobile, you can check mempool by tapping on Network, then tap on any point on the fee color stripe (left is from tip of mempool, right is bottom of it). You can install Electrum and create an empty wallet on your mobile and use it only for mempool checking.

SCHEDULE YOUR TRANSACTION TO WEEKENDS

• Weekends will give you best transaction fee. Best means cheaper or cheapest as I shared in that post.
• Weekends are best chances for your to make small input consolidations too. Especially Sunday.

It is a summary table for what I analyzed on Bitcoin transaction fee.

REFERENCES

• Making sense of Bitcoin transaction fees (Bitzuma)
• How to manually set transaction fees (Bitcoin Electrum)
• Always updated bitcoin fees image from mempool.space
• [TOOL] Bitcoin data API to use in bitcointalk as images
• [Telegram Bot] Bitcoin Fees - fees and tx tracker
• Bitcoin Transaction Size Calculator (Jameson Lopp)
• Transaction size calculator (Bitcoin Optech)
• UPDATED - Plot your transaction in the mempool
  
  • https://bitcoindata.science/plot-your-transaction-in-mempool.html
• Consolidation your input: It's not purpose of this thread but you can read
  
  • Consolidate your small inputs
  • Practicing it with Bitcoin transaction size calculators above

Note:

• It was posted first in that topic, on Bitcointalk
• I leave the source link to avoid plagiarism accusation.
• I excluded/ included minor things from an original thread ^{if necessary}.

[tranthidung]

Another website you can use is Whatthefee.io.

It has a simple table with cross information about Fee rate, Time (in hour), Probability to get confirmation within the given time. It does not provide many details like mempool websites but can give you some raw information. If you need more, check details with sites mentioned in OP.

[vegasus]

I am using this Electrum wallet and it is true that this wallet can really help for transactions using Bitcoin. Moreover, the fee was not that big at that time. However, in recent months transaction or transfer fees from Electrum rose drastically. What is the cause, is it because there are lots of transactions on the network or is it due to the influence of Bitcoin prices which are increasing over time? In fact, the increase has actually increased several times compared to previous transaction fees.

 I thought about using a lightening network but I really don't really understand this yet. Maybe it's true that it can help us to further minimize what we spend when transferring Bitcoin.

[tranthidung]

What is the cause, is it because there are lots of transactions on the network or is it due to the influence of Bitcoin prices which are increasing over time? In fact, the increase has actually increased several times compared to previous transaction fees.

You pay Bitcoin transaction fee with bitcoin BTC, not with USD or USDT.

So if you pay same 1000 satoshi for one transaction, in two situations, with Bitcoin price is $10,000 and $50,000, your transaction fee in satoshi is the same but in USD value are different.

Of course, more demand for Bitcoin on-chain transactions, mempools will be congested more and transaction fee will be higher.

Main reasons of expensive transaction fee recent months.

• Inscriptions, Mempools and Miners

I thought about using a lightening network but I really don't really understand this yet. Maybe it's true that it can help us to further minimize what we spend when transferring Bitcoin.

You can not use Lightning (not Lightening) Network if you don't use Bitcoin on chain to open your Lightning Network channel. You have to do an on-chain transaction first, as a prerequisite, before using Lightning Network.

[pawel7777]

Great topic, thanks for posting this OP, sent you some karma.

Reminder: Electrum uses sat/vbyte for fee rate but its label is in sat/byte and has yet been corrected by Electrum developers

This is particularly helpful. It all makes sense now. I struggled to figure out the right fee, as most online fee calculators would only be showing "sats/vByte" whereas Electrum was displaying that as "sats/byte", so I thought I'd have to convert it somehow.
I'm not sure how reliable are Electrum's suggested fees, it let me down previously when I sent a tx with a fee that was supposed to be confirmed within few hours, but got stuck for over a day so had to use RBF to bump it.

[tranthidung]

Reminder: Electrum uses sat/vbyte for fee rate but its label is in sat/byte and has yet been corrected by Electrum developers

This is particularly helpful. It all makes sense now. I struggled to figure out the right fee, as most online fee calculators would only be showing "sats/vByte" whereas Electrum was displaying that as "sats/byte", so I thought I'd have to convert it somehow.
I'm not sure how reliable are Electrum's suggested fees, it let me down previously when I sent a tx with a fee that was supposed to be confirmed within few hours, but got stuck for over a day so had to use RBF to bump it.

It is a label only.

Read the issue on Electrum Github and replies from Electrum developers but at the end they refused to change their label.

label transaction sizes as "vbytes" not "bytes" #6961

Note that no one should ever care about the "bytes" size of a transaction, except for low-level development.
It is only ever the vbytes/wu(weight) that matters; for the vast majority.
No one besides developers know what wu is, so we cannot use that.
So we must show units in vbytes everywhere then, and we do.

The question then is if vbytes should be labelled as "vbytes" or as "bytes".
I personally do not care much, would perhaps ever so slightly favour "vbytes" as that is the technically correct term;
however I think showing "vbytes" would result in more user confusion, as users would then ask what a vbyte is.

[dkbit98]

You pay Bitcoin transaction fee with bitcoin BTC, not with USD or USDT.

That is true for bitcoin mainnet, but there is a way of using USDT with Bitcoin with Liquid Network second layer solution.
Fees are much lower this way and you can can use L-BTC and L-USDT in the same time, swap them and switch back to on-chain BTC.
With sending L-USDT transactions are paid wit L-USDT, and you can even receive USDT directly from tron and ethereum, by using Aqua wallet.
I think this is great way to minimize fees and still use bitcoin plus stable coins.